Business Segments

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Business Segments

Note 15 — Business Segments

We have three segments: (i) Development and Redevelopment, (ii) Operating, and (iii) Other.

Our Development and Redevelopment segment consists of properties that are under construction or have not achieved stabilization, as well as land held for development. Our Operating segment includes 21 residential apartment communities that have achieved stabilized level of operations as of January 1, 2021 and maintained it throughout the current year and comparable period. We aggregate all our apartment communities that have reached stabilization into our Operating segment. Our Other segment consists of properties that are not included in our Development and Redevelopment or Operating segments. During 2022, we disposed of two Seattle, Washington area properties and one stabilized property located in Fremont, CA that was previously reported within our Operating segment. In addition, we terminated the leases for four residential apartment communities that were previously reported within our Development and Redevelopment segment. Prior period segment information has been recast based upon our current segment population, and is consistent with how our chief operating decision maker ("CODM") evaluates the business. The recast conforms with our reportable segment composition as of December 31, 2022.

Our CODM uses cash flow, construction timeline to completion, and actual versus budgeted results to evaluate our properties in our Development and Redevelopment segment. Our CODM uses proportionate property net operating income to assess the operating performance of our Operating segment. Proportionate property net operating income is defined as our share of rental and other property revenues, excluding reimbursements, less direct property operating expenses, net of utility reimbursements, for consolidated communities. In our Consolidated Statements of Operations, utility reimbursements are included in Rental and other property revenues, in accordance with GAAP.

As of December 31, 2022, our Development and Redevelopment segment consists of 12 properties; three residential apartment communities with 1,185 planned apartment homes, a single family rental community with 16 planned homes plus eight accessory dwelling units, and one hotel, with 106 planned rooms, we are actively developing or redeveloping; and land parcels held for development. Our Operating segment includes 21 consolidated apartment communities with 5,582 apartment homes. Our Other segment includes our Eldridge Townhomes apartment community, stabilized but not owned for the comparable reporting period, and 1001 Brickell Bay Drive, our only office building.

The following tables present the results of operations of consolidated properties, with our segments reported on a proportionate basis for the years ended December 31, 2022, 2021, and 2020 (in thousands): Prior period carve out amounts have been adjusted retrospectively to reconcile the difference between non-recurring carve out accounting and current results as it relates to insurance

expense, for the years ended December 31, 2021 and 2020, respectively. This adjustment ensures comparability of post-Separation results to pre-Separation segment results. Absent the adjustment, 2021 NOI would have increased 6.9%.

	Development and Redevelopment			Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Year Ended December 31, 2022:
Rental and other property revenues	$	919		$	135,224	$	18,030	$	6,097	$	30,074		$	190,344
Property operating expenses		2,198			40,841		5,560		6,077		17,116			71,792
Other operating expenses not allocated    to segments (3)		—			—		—		—		198,640			198,640
Total operating expenses		2,198			40,841		5,560		6,077		215,756			270,432
Proportionate property net operating    income (loss)		(1,279	)		94,383		12,470		20		(185,682	)		(80,088	)
Other items included in income before    income tax (4)		—			—		—		—		189,510			189,510
Income (loss) before income tax	$	(1,279	)	$	94,383	$	12,470	$	20	$	3,828		$	109,422

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Year Ended December 31, 2021:
Rental and other property revenues	$	2,036	$	122,303	$	14,559	$	5,256	$	25,682		$	169,836
Property operating expenses		1,446		39,625		4,405		5,199		16,938			67,613
Other operating expenses not allocated    to segments (3)		—		—		—		—		117,863			117,863
Total operating expenses		1,446		39,625		4,405		5,199		134,801			185,476
Proportionate property net operating    income (loss)		590		82,678		10,154		57		(109,119	)		(15,640	)
Other items included in income before    income tax (4)		—		—		—		—		(2,910	)		(2,910	)
Income (loss) before income tax	$	590	$	82,678	$	10,154	$	57	$	(112,029	)	$	(18,550	)

	Development and Redevelopment		Operating		Other		Proportionate and Other Adjustments(1)		Corporate and Amounts Not Allocated to Segments (2)			Consolidated
Year Ended December 31, 2020:
Rental and other property revenues	$	1,515	$	116,888	$	13,079	$	5,577	$	14,392		$	151,451
Property operating expenses		981		37,917		4,117		4,885		13,614			61,514
Other operating expenses not allocated    to segments (3)		—		—		—		—		104,294			104,294
Total operating expenses		981		37,917		4,117		4,885		117,908			165,808
Proportionate property net operating    income (loss)		534		78,971		8,962		692		(103,516	)		(14,357	)
Other items included in income before    income tax (4)		—		—		—		—		(1,563	)		(1,563	)
Income (loss) before income tax	$	534	$	78,971	$	8,962	$	692	$	(105,079	)	$	(15,920	)

(1)Represents adjustments for the redeemable noncontrolling interests in consolidated real estate partnership’s share of the results of consolidated communities in our segments, which are included in the related consolidated amounts, but excluded from proportionate property net operating income for our segment evaluation. Also, includes the reclassification of utility reimbursements from revenues to property operating expenses for the purpose of evaluating segment results. Utility reimbursements are included in Rental and other property revenues in our Consolidated Statements of Operations prepared in accordance with GAAP.

(2)Includes the operating results of apartment communities sold during the periods shown or classified as Held for Sale at the end of the period. Also includes property management expenses and casualty gains and losses, which are included in consolidated property operating expenses and are not part of segment performance.

(3)Other operating expenses not allocated to segments consists of depreciation and amortization, general and administrative expense, and miscellaneous other expenses.

(4)Other items included in income before income tax benefit (expense) consists primarily of interest expense, gain on our interest rate options, gain on sale of Real Estate, lease modification income and mezzanine investment income (loss), net.

Net real estate and non-recourse property debt, net, of our segments as of December 31, 2022 and 2021 were as follows (in thousands):

	Development and Redevelopment			Operating			Other			Corporate(1)		Total
As of December 31, 2022:
Buildings and improvements	$	449,316		$	674,419		$	198,646		$	—	$	1,322,381
Land		228,568			259,033			153,501			—		641,102
Total real estate		677,884			933,452			352,147			—		1,963,483
Accumulated depreciation		(2,378	)		(468,054	)		(60,290	)		—		(530,722	)
Net real estate	$	675,506		$	465,398		$	291,857		$	—	$	1,432,761
Non-recourse property debt and construction loans, net	$	200,135		$	823,692		$	24,372		$	—	$	1,048,199

	Development and Redevelopment			Operating			Other			Corporate(1)			Total
As of December 31, 2021:
Buildings and improvements	$	202,367		$	675,269		$	196,853		$	182,725		$	1,257,214
Land		82,325			259,033			153,501			39,426			534,285
Total real estate		284,692			934,302			350,354			222,151			1,791,499
Accumulated depreciation		(1,426	)		(444,324	)		(41,841	)		(73,524	)		(561,115	)
Net real estate	$	283,266		$	489,978		$	308,513		$	148,627		$	1,230,384
Non-recourse property debt and construction loans, net	$	36,218		$	428,308		$	—		$	182,181		$	646,707

(1)During the year ended December 31, 2022, certain properties were sold or reclassified as Held for Sale, and therefore are not included in our segment balance sheets as of December 31, 2022. We added a Corporate segment to the tables above for presentation purposes to display these assets and the associated debt as of December 31, 2021.

In addition to the amounts disclosed in the tables above, as of December 31, 2022, the Development and Redevelopment segment right-of-use lease assets and lease liabilities aggregated to $110.3 million and $114.6 million, respectively, and as of December 31, 2021, aggregated to $96.3 million and $95.4 million, respectively. As of December 31, 2022, right-of-use lease assets and lease liabilities primarily related to our investments in Upton Place, Strathmore and Oak Shore. As described in Note 4, we entered into termination agreements that cancelled our leases on North Tower of Flamingo Point, 707 Leahy, The Fremont, and Prism properties on September 1, 2022. Consequently, during 2022, we wrote off $326.1 million and $337.3 million of right-of-use lease assets and lease liabilities, respectively.